Challenging Steam

I suppose the real questions are how Steam got to be so popular in the first place and why it hasn’t really felt much in the way of heat from challengers up until now?

In hindsight it seems like some sort of crazy accident. A little over 15 years ago, in September 2003, Valve launched a replacement for World Opponent Network, the Sierra Online created platform and which Valve ended up owning, because they wanted something that would do software updates, DRM, anti-cheat, and online matchmaking in one package.

And thus Steam was born.  First it was for Counter-Strike, but the real test came with the launch of Half-Life 2, the first game that made it mandatory to register with Steam.  Problems with that, including inadvertent suspending of a lot of people whose only mistake was buying the retail box (myself included) did not seem like an auspicious moment for the fledgling platform.

That’s me being beaten by the metro cop

Me being me, that soured me on Steam and all things Valve for a good five years.  I burned my account and walked away.  The arbitrary nature of my experience and the whole “I have the physical disk why can’t I just play the damn game?” question kept me away.  But it was an era where the physical disk was still king, so one could do that.  I walked by the Orange Box on the shelf at Fry’s with my nose in the air, knowing it was another Steam scam.  I wasn’t going to play Portal because I felt Steam was the lie.

But things changed over time.

The coming of Civilization V was the turning point for me.

Up until then I had purchased every new version in the Civilization series at the first possible opportunity.  The fact that the game required you to register it and use it with Steam gave me pause for a couple of days, but eventually I caved.  I created a new Steam account, which is the one I still use today, so I could get in on that traditional day one Civ fun.

Same as it ever was

I remained wary of the service.  Again, the idea that one company could basically remove my ability to play video games I had purchased… not MMORPGs, but single player games… kept me from getting comfortable with Steam for a long stretch.

But then we entered the era of the Steam sale.  I think that, more than anything, made people get on board with Steam.

The concept, as initially explained, was quite simple.  Any game that launches… and we’re talking about games from big studios with marketing budgets, not indies… will have a certain amount of demand for it at the list price.  Once that market has been exhausted one can stimulate further sales by lowering the price.  That gets people who weren’t going to give you any money to buy in.  You get less money, but it is better than no money.

This was the price/demand curve from Economics 1A of my freshman year of college.  This was supposed to make developers more money.

What it really did was train a lot of people to wait for the inevitable Steam sale, or at least that is one of the complaints you hear from devs now and again.  Steam ruined the concept of list price.

Along the way Steam went from being a service for Valve games to being the DRM and matchmaking for certain third party games, to being the sales platform for just about anybody.  At the same time Valve went from being the company that make good games (that inevitably arrived late) to the company that runs Steam.  Being an online retailer turns out to be a pretty profitable business compared to video game development.

The problems of success are the best problems to have, but they are still problems.  Over time Valve removed just about every barrier to entry that kept any dev from getting on to Steam.  And every dev wanted to be on Steam because, during a short period of time, being on Steam was the key to success.  That was the visibility you craved as an indie dev.  But the mad rush towards success and Valve simply letting everybody in got us to the pile of garbage that is most of the games on the service today.  Getting on Steam is no guarantee to sales or even visibility anymore.

Meanwhile, competitors lurked.

Sure, a lot of people were happy to sell through Steam.  Buying a discounted Steam code for a title at Amazon or Green Man Games is a pretty normal thing.

Others were unwilling to cut Steam in on their action.  You don’t find any Blizzard games on Steam.  They don’t need to sell there, they are big enough on their own.

For some reason Activision was okay putting Call of Duty on Steam for ages.  I suspect that, in a world where a lot of CoD sales are on consoles where the retail channel and the platform owner take their cut off the top, Steam taking their due didn’t seem like a bad deal.   But with the coming of digital distribution that seems to have changed finally.

There were small players who tried to get into the Steam-like sales platform business.  I remember the late Trion Worlds trying to turn their Glyph launcher into a third party storefront.

Then there was EA, who wanted to take on Steam by being, in their words, the Nordstrom to Steam’s Target.  That didn’t work out for them as well as they had hoped.  EA’s reputation, hardly akin to anything like Nordstrom, kept them from being a overall competitor to Steam. But with their Origin storefront they were able to opt out of Steam with SimCity and The Sims 4, depriving Steam of some revenue.

Which brings us to the situation as it stands now.  Steam is a mess.  New titles get lost in the morass of new titles that spring up every day.  Steam wavers on how to deal with its problems on that front.  Meanwhile, Steam’s cut of sales, once tolerable in the age of physical media, is now starting to be a drag on margins, a concern to any dev who is publicly held.  So things are running against it.

Big devs like Activision are more than happy to sell Call of Duty to you directly (or via the Blizzard launcher).  Fallout 76 also chose to give Steam a miss, a first for the franchise in a long time.  And it seems like that plan is going to become more common.  To counter that Valve has announced a new revenue sharing plan, so if you make more money Steam will take less of a cut.

And then there was Epic Games’ announcement earlier this week that they plan to offer their own platform and only take 12% off the top compared to Steam’s default 30%, even waving the fees for using their Unreal Engine if you go with them.  They even have a nice revenue split chart with their announcement.

Look how much more Steam takes

And if that were not enough, both Discord and Twitch have been backing their way into becoming game selling platforms.  Amazon, which owns Twitch, has been priming the pump with free games available via the Twitch client (the one time Curse client that a lot of us had already installed to manage WoW addons) for Prime members.  And you can just bet that will be the platform used to sell their upcoming games.  And Discord has had its own storefront going since August.

What is Steam going to do?

Well, they do have all the advantages of the incumbent, including a lot of players with large investments in their Steam libraries.  I’ve said in the past that this is a huge barrier to any competing service showing up.  I certainly do not want to have to keep track of which game I have on which service.  I have problems enough remembering which show or movie I want to watch is on Netflix, Hulu, Amazon, or Comcast.

And then there is all of the community stuff like mods that Steam has accumulated over the years.  You can’t make that sort of thing happen overnight.

So how do you assail an incumbent?  Be better, be cheaper, or be different.

There are certainly ways to be better than Steam.  I do wonder what Epic’s plan on that front is.  By lowering their take so dramatically compared to Steam they are going to see a lot of interest from smaller devs who will feel like they are getting the shaft from Steam and the announcement that big players pay less.  Epic just has to figure out how to curate so they get quality rather than quantity.

Being different is hard to assess, so I’d have to see more from any Steam competitor.  I don’t like the Steam storefront interface, but I dislike it less than most competitors.

And then there is being cheaper, which Epic went for in a big way.  Not cheaper for you and I, but cheaper for the developers using their platform.  At the percentage they are talking, and with the muscle they have developed pushing Fortnite, they might be able to woo some bigger titles their way.

We shall see.  The path of Steam over the years has been a strange one from time to time.  I doubt it will be over any time soon, but Valve’s dominance does seem to be under an actual threat for the first time.

Others assailing this topic:

13 thoughts on “Challenging Steam

  1. Asmiroth

    Steam doesn’t have a monopoly on price, but they do offer insane discounts what seems every 2 months. Remember when Steam had 1 sale a year? If a game had released in the past 3 months, you’d have to wait until the following year. Now with so many sales, people are right to expect to simply put a game on the watchlist and wait. Just a month’s wait can save 30% or more.

    Better for consumer is going to be tough. There’s too much garbage. Mobile apps stores and Steam have that in common. Someone/thing needs to triage that to relevant content – and then add the serendipitous finds. Better for developers seems baked into the Epic model with simply better admin tools. The 14 day return won’t make light of day, but the rest of the pitch should make it easier for devs to manage their games and identities.

    It’s a tad ironic that Steam took off because of problems with the physical media market, and now we’re looking at Steam as being the problem in the virtual media market.

    Liked by 1 person

  2. anypo8

    At this point, Steam’s infrastructure is pretty top-notch and battle-hardened. I will be interested to see how long it takes and how much it costs for Epic to duplicate that.

    Liked by 1 person

  3. Bhagpuss

    I didn’t bother with Steam for many, many years. As someone who pretty much only plays MMOs it was relatively useless to me. Eventually I ended up installing it because it was required to play one of the very rare non-MMOs I bought (actually, was given as a present, but i asked for it so same difference), Broken Sword 5.

    Ironically, although that was a quite a few years ago now, I still haven’t played BS5. Must get on that… BUt once I had Steam installed I slowly drifted into buying the odd title there or playing free titles via Steam rather than downloading and installing some proprietory platform.

    Even so, I still only have about 15 games on my Steam account. I could very easily drop Steam and move to another platform if a good one appears. I have no affection for or loyalty to Steam – The UI is horrible for one thing and I can never find much I want there even in the sales. – so it would be easy both practically and emotionally.

    Watching developments with interest.

    Liked by 2 people

  4. Krumm

    At first I hated Steam, I mean I want to own my physical copies of my games for decades of prosparity and fun…I cant help it if the 5.1/4 disk arnt popular anymore (in Jest, Although I still do own the 3.1/2’s for Arena Elder Scroll and Xcom UFO Defense). I remeber the first couple of games that made me …made me install them threw steam (heres looking at you again XCOM …the remake and I believe Civilization 4 or 5). However after many years I found that I could incorporate all my old titles cheaply into my steam database. So while I have a non steam copy of many games I also have a digital copy through steam.

    Tee convenience of having a digital library has its advantages and disadvantages but these days everything just is digital digital digital. I prefer both myself.

    One thing I do like about Steam is that they have the workshop for a easy source for mods to games…i.e civilization’s, Stellaris, and the like.

    My fear is what happens in a few decades to the copies of these games should steam wilt or get boiught out several times? I guess I should install full games to some old hardrives to play “offline” that works right…?

    Liked by 1 person

  5. Kaylriene

    I actually really like Steam, but I got Half Life 2 a bit late, so I managed to skirt the early account locking issues, thankfully. I tend to agree it’s a mess though, in that it very obviously wasn’t really made originally to be all the things it is and so the pile on of new features has been a mess.

    I’d like to see a better shopping experience, with tabbed browsing in the interface so I can open multiple game pages at once to view. Better curation – if you already have data on how much time I spend in a game, and you can compile those result to give me better auto-recommendations, great! If you can tie in better community curators that can surface the hidden gems, that’s even better! In terms of patching and launching, I wish Steam had better error reporting – I can’t launch Crysis via Steam on my new machine and it doesn’t tell me why – just tries and fails with no error.

    I wish there was better crossover of friend lists between all these platforms in general – what I really like about consoles is that as much as I loathe the concept of PSN and XB Live, at least those services have a friends list I can use for all games on the platform. I have a Steam list…an Epic list…a Blizzard list…an FFXIV list…a GW2 list…an Origin list… and so on. Blizzard already has an API for login using it on Wowhead and some other sites – I’d really like to see a social API of some sort to allow me to merge my contact lists into a single monolithic one, without having to use Facebook or another third-party to mediate that. I know it’ll probably never happen, but that is my pipedream for PC community – just give me a place that can merge my friend’s lists and let me launch the appropriate game if I want to join in on something.

    As for the shop, I like the Epic idea – indie devs need that support more than the big names, but the big names have all the clout. Waiving the 5% cut for UE games is a strong play too – it makes the store the de facto place to showcase new Unreal Engine work, and creates a strong financial incentive for developers at all sizes.

    Liked by 1 person

  6. fatherofdaughters

    Even though I have long since embraced Steam, Origin, Uplay and various other digital distribution platforms I do regularly remind myself that I don’t really own any of these games. I have acquired a limited license to play games which may or may not remain valid into the future. I have already experienced the closure of an online distribution platform with the loss of the games attached to it and I fully expect others will shut down in the future. This used to bother me a lot more than it does now. The lost games I still want to play are readily available on other services and sites like “isthereanydeal” enable me to pick up any older game I want very cheaply. I am actually more annoyed at the sharing restrictions that digital distribution enforces. I have a library with hundreds of games but only one of them can be played at a time. Steam’s family sharing is a step in the right direction but it still only allows one person to have access to a library at a time. My daughter cannot play DOOM while I am playing Civ V for example.

    Liked by 1 person

  7. fatherofdaughters

    Apologies for the second comment but i just remembered my introduction to Steam and I thought I would share. I created my Steam account when I acquired a physical copy of Half Life 2. Unfortunately at the time I was limited to unreliable 56k dial up internet. Imagine my annoyance at bringing the game home to then realise I needed to wait several hours while it downloaded patches over my slow internet. To make matters worse for the first week or so Valve patched the game fairly regularly. Every new patch meant at least a half an hour delay before I could play the game. I really didn’t like Steam at that time.

    Liked by 1 person

  8. Redbeard

    Me being me, that soured me on Steam and all things Valve for a good five years. I burned my account and walked away.

    I see I’m not the only one to hold grudges for a while.

    In my case, the only reason why I got into Steam was because of Civ V as well. I was perfectly happy with Civ IV (still am, really), but I’d bought Civ V for my son, so that meant that I put in the DVD and….WTF??!!! I have to install Steam to get the game? Really?

    And then Skyrim had the same issue.

    And the Mass Effect Trilogy required me to download the games from Origin.

    And so on, and so forth.

    As much as I look at Steam as containing waaaay too many Hentai stories masquerading as games, at least it’s a central location to operate from. I’m not a fan of Origin, because Origin won’t let you share your game with your family like Steam will. (Some people might share their Origin password like they do with Netflix, but I’m not one of those.) Blizzard’s Battle.Net isn’t much better, as they had their controversies about in-WoW visibility, showing that you were active even when you just wanted to play on an alt by yourself for a while.

    The thing is, no matter how people perceive Steam, once Amazon gets into the game they become the instant leader that everybody is chasing. Steam is just small potatoes compared to the Bezos Behemoth, and people saying otherwise are smoking something. I’m sure that Amazon is trying to figure out a way to supplant Sony and Microsoft in the distribution of games to their respective platforms, effectively usurping those two at being the gatekeeper for PS4 and XBoxOne.

    A side note: I really love Twitch, but it still saddens me that amazon owns it.

    Liked by 1 person

  9. .xyd

    Steam pissed me off around the same time it did for you. I remember the early HL issues as well, also being a physical disk kinda guy, and Steam still annoys me nearly every time I try to play a game for some reason. And the whole “full screen” thing where it wants to be my gaming OS is off-putting. I’m just a couple years away from writing them a strongly-worded letter.

    Also stumbled onto this today, on-topic.
    https://www.geeksaresexy.net/2018/12/06/morning-coffee-comic/

    Liked by 1 person

  10. Alunaria

    I often used to say to hubby that if there is one thing I wished I had invented it’s Steam. I do not use it much myself but despite its short comings, it seems genius.

    Like

  11. Jacob

    fatherofdaughters – I used to have the same issue with steam family sharing, but there is a pretty simple work around if you are only playing offline games (e.g. Civ V). Go into offline mode on the computer playing civ V, then the family sharing will work from the other computer.

    Like

  12. PhearalDrood

    I don’t like platforms like Steam much, at all. Foremost is that one wrong step, real, or perceived could lead to the loss of everything you’ve purchased in that platform. I also prefer physical disks, not only because it harkens back to an older time when games were developed around the single player experience, but also because I could resell the disks if I decided to later. With platforms like Steam I’ve lost that capability, though it isn’t an issue born of Steam. Developers had been angry they didn’t “make anything off of resale” for quite a while. Hence the emphasis on community platforms, and tying games into *your* online persona.

    Be that as it may, I’d purchased exactly two games off Steam over the years but have been considering purchasing Stellaris off Steam recently. I’ve never purchased anything off any of the other platforms, except Blizzard. Blizzard’s platform is a case where I was backed into it and was already so invested in WoW when they turned Battle.net into what it is now, that I couldn’t really walk away. That, and Warcraft was never a single player game to begin with, so I felt differently about the subject in that case.

    But what about Diablo? I don’t think you can even play that any more without buying into Battle.net. At least, not the recent additions to the line. Same with Starcraft.

    Like

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